Fallout From the “Deal”

I don’t pretend to understand all the ramifications of the “deal” struck in Congress recently to keep us from going over the fiscal cliff. But the complaints from the political right-wing suggest that the deal was a good thing for the rest of the country. I figure if the Tea Party doesn’t like it, it must be a good thing for the majority of people in this country.

I do wonder, however, whether it might have been better in the long run if we had fallen off the cliff — on our collective butts — in order to force this country to eliminate some of the fat in our budget (starting with defense spending, of course) and make all of us pay more taxes — given the fact that we are taxed at a very low rate compared with the rest of the “developed” world, and also given the fact that our economy thrived when we were paying more in taxes. I was especially hoping for tax raises on the wealthy who have benefitted mightily from the Bush tax cuts. As I understand it, the new deal will raise taxes on individuals who make above $400,000 a year and that will help reduce the deficit somewhat. But a great many people who make a great deal of money will still avoid paying their share.

There’s more: one of the more interesting ramifications of the deal is the complaint we are hearing from some of the wealthy who have threatened to discontinue giving to charities. A recent story on HuffPost focusing on this issue caught my eye. In that story we are told that

Legislation passed by the Senate late Tuesday night will limit the amount wealthy people can claim for charitable deductions on their taxes. While some say donors shouldn’t be motivated by the amount of money they can write off, others –- including some nervous nonprofits –- argue that tax breaks for charitable giving should have been left untouched in the deal.

One such dissenter is Ari Fleischer, a former White House press secretary under President George W. Bush. Fleischer tweeted his distaste for the deduction decision on Tuesday:

“I increased donations to charity in 2012. This deal limits my deductions so I, & many others, will likely donate less in 2013.”

— Ari Fleischer (@AriFleischer) January 1, 2013

When I was a kid I loved playing marbles. We played “keepies” where the winners get to keep the marbles they hit out of a ring drawn in the dirt. Every now and again a kid would see that he was losing and grab his remaining marbles and refuse to play any more. This is what Fleischer’s complaint reminds me of. Wealthy people like Ari Fleischer don’t want to play any more because they won’t get the tax breaks they are used to getting for giving some of their money to those less fortunate than themselves. Poor Ari. I expect he cries all the way to the bank. I thought the idea behind charitable giving was to help others, not to get tax breaks. Great wealth seems to cloud the brain.

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8 thoughts on “Fallout From the “Deal”

  1. Children on the playground analogy: Playing for Keeps, Red Rover Come Over, Tug of War, Tag You’re It, Keep Away, Twenty-Four Robbers Came Knockin’ at My Door, King Me! I am incensed and weary that the few bullies on the playground [are allowed to] continue to call the game.

    Will the grown-up(s) on the field please stand up…

  2. Hugh, great post. As we approached the deadline, I began to fall more in line with the “fall on our collective butts” argument (great analogy, by the way). Barney has suggested this action from the get-go. I’d be interested to see Bowles or Simpon’s take. I am glad that they continued the extended unemployment as we have some people who are beyond crisis and that money will go directly into the economy. I am disappointed in not increasing taxes on the above $250K group as committed to in the election and the failure to do any spending cuts. Boehner/ Obama were close to a deal, yet the Plan B fiasco caused the baton to go to the senate. I am convinced the Norquist crowd worked the room and caused Boehner’s move that backfired.The sequestration has some significant defense cuts in it, so I am hoping that we will let much of that stand along with other cuts, all of which need to be done with a scalpel and not an axe. I have noticed people are big on cuts until it affects them. Well done. BTG

  3. Wanna’ bet that Mittens Romney has already filed an amended tax return to claim the full amount of charitable contributions he made, instead of the partial claim he reported?

    Ari is the epitome of why the “Pay it Forward” movement will never hit the wealthy; if they can’t get credit for their contributions such as their name on the building or associated with a professors chair, or a complete tax deduction, then they aren’t going to contribute.

    I think all of us need to pay more taxes, i never fully supported Obama’s cut off at $250K. While saying that, the defense budget is indefensible; too much waste on programs that make no sense except to the defense contractors. I see where we just signed an additional multi-hundred billion dollar contract for continuing the F-35. This program should be dumped! And 1000 generals and admirals-this is ludicrous.

    So, like many others, I think we should have gone over the cliff, cut the defense spending immediately by 50%, and work piecemeal to change the tax code.

    Good post, Hugh, as always.

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